The Senate has resumed its consideration of bankruptcy reform legislation (S. 625); action may be completed during the week of January 31.
The matter was put on hold during Congress’ winter recess because lawmakers deadlocked last November over whether to debate a series of amendments supported by many Democrats. Senate Majority Leader Trent Lott (R-MS) announced a motion to invoke cloture and end debate on the bill, scheduling the cloture vote for January 25—the Senate’s first order of business in the new year.
However, upon returning from recess, Senators negotiated an agreement to consider some of the disputed amendments. Sen. Lott canceled the cloture vote, which was considered unlikely to garner the necessary 60 votes.
Controversial Amendments
Two Democratic amendments in particular have drawn Republican criticism. Last fall, Sen. Lott expressed concern that Democrats are seeking to “shoehorn” their “social agenda into the bankruptcy measure.”
One amendment, proposed by Sen. Charles Schumer (R-NY), would prohibit the discharge of debt resulting from a conviction under the Freedom of Access to Clinic Entrances (FACE) Act (P.L. 103-159). The amendment follows a 1998 decision against Operation Rescue’s Randall Terry, which brought no damage award for the plaintiff in the case, Planned Parenthood, after Mr. Terry filed for bankruptcy.
The other amendment, offered by Sen. Carl Levin (D-MI), would bar gun manufacturers from discharging debt associated with lawsuits filed by local governments against the firearms companies.
Two Amendments Approved
The Senate briefly took up the bankruptcy bill on January 25. However, the snowstorm in the Washington area delayed further action until the week of January 31. As consideration resumes, debate is expected on the two controversial amendments, as well as several others.
On January 25, two amendments were approved by voice vote. The first, sponsored by Sen. Paul Sarbanes (D-MD), requires credit card companies to prominently display toll-free phone numbers for customers to inquire about outstanding balances and the time required to pay them. The other amendment, offered by Sen. Larry Craig (R-ID), exempts from a bankruptcy assessment any personal property left at a pawn shop when the owner files for bankruptcy.
House Version Approved
On May 5, 1999, the House approved a bill (H.R. 833) similar to S. 625. In 1997, bankruptcy reform legislation was approved by both chambers. Although the resulting conference report was approved by the House, it did not come to a vote in the Senate before the close of the 105th Congress.
Several aspects of bankruptcy reform would affect women and families. In 1997, more than 1.3 million American families filed for bankruptcy, an estimated 243,000 to 325,000 of which involved child support and alimony. About half of the cases involved women trying to collect from bankrupt ex-husbands, while the other half involved women filing for bankruptcies themselves.
In an effort to discourage abuse of the bankruptcy system, S. 625 and H.R. 833 would expand the category of nondischargeable debts—those that must be paid despite a bankruptcy filing—to include credit card debt incurred within 90 days of a filing. Under current law, child support and alimony payments are nondischargeable, but most credit card debt is not.
The move to increase the amount of nondischargeable credit card debt has drawn strong opposition from many women’s and children’s advocates. They have argued that custodial parents whose ex-spouses file for bankruptcy would be forced to compete against large credit card companies for the limited resources available for paying the credit card debt, as well as alimony and child support.
S. 625 and H.R. 833 were drafted with several provisions designed to address those concerns. For example, one provision would make support payments the first priority among nondischargeable debts. Currently, although child support and alimony are listed seventh, judges often use discretion to make them a higher priority. However, under S. 625 and H.R. 833, the category of nondischargeable debt would be larger and judges would have less discretion.
As the result of continued concern expressed by women’s and children’s advocates, S. 625 sponsor Sen. Charles Grassley (R-IA) included language in his manager’s amendment at the recommendation of Sen. Orrin Hatch (R-UT), who negotiated the matter with the National Women’s Law Center and the National Association of Attorneys General.
Under the amendment, custody and divorce proceedings would be allowed to move forward despite the automatic stay that otherwise freezes the legal actions affecting an individual declaring bankruptcy. Already, S. 625 and H.R. 833 would allow the interception of tax refunds and the revocation of drivers licenses from parents who owe support, despite the automatic stay.
Sen. Hatch’s language also would increase access to information about the employers of deadbeat parents, in an effort to expedite wage withholding. In addition, the amendment would bar the approval of a bankruptcy plan or the discharge of debt until arrears are paid on outstanding support.
